Catalan leader Carles Puigdemont is announcing his plans for the future of the Spanish province.
He told the regional parliament in Barcelona that he wanted to "de-escalate" the tensions surrounding the issue.
There had been speculation that he would make a unilateral declaration of independence from Spain following a disputed referendum.
But there were also growing demands for him to drop plans to break away.
Reports say Catalan party leaders met before the session began an hour behind schedule.
A vote was held on 1 October which Catalan officials say resulted in almost 90% of voters backing independence for the north-eastern region. Turnout was put at 43%.
The vote was deemed illegal by Madrid and suspended by Spain's Constitutional Court. "No" voters largely boycotted the ballot and there were several reports of irregularities. National police were involved in violent scenes as they manhandled voters.
Mr Puigdemont hailed the referendum process and condemned the actions of the Spanish government, but acknowledged that people on all sides were worried about what would happen next.
"We are all part of the same community and we need to go forward together. The only way forward is democracy and peace," he told deputies.
But he also said Catalonia was being denied the right to self-determination, and paying too much in taxes to the central government in Madrid.
Catalan police have been posted outside the parliament in Barcelona, sealing off the grounds to the public. A large pro-independence rally is currently taking place in the area.
Analysis: Will Puigdemont make good his threat?
Tom Burridge, BBC News, Barcelona
Never before has the world watched Catalonia's regional parliament so closely. This evening, with probably large numbers of police and protesters outside, the leader of the devolved government is due to address Catalan MPs. Carles Puigdemont plans to present his government's results of the disputed referendum, which Madrid declared illegal.
Since then, Mr Puigdemont has said on several occasions that he will declare independence, despite fierce opposition across Spain and criticism from European governments.
Now, will he make good his threat? Or will he announce a more nuanced strategy, hoping still for a proper, recognised referendum one day? Under pressure to act, the Spanish government has made stark warnings, too. If the order comes, thousands of Spanish national police, here in Barcelona, could intervene.
What security measures are being taken?
The Catalan police force, the Mossos d'Esquadra, closed the Ciutadella Park, where parliament is located, early in the day, positioning vans near the entrances and alongside parliament.
The authorities said the measures were "for safety reasons".
The Catalan National Assembly (ANC), a non-party grassroots movement, earlier urged supporters in a tweet to come to the parliament district to "defend" the vote for independence.
What is Puigdemont likely to tell parliament?
Independence supporters have been sharing the Catalan hashtag #10ODeclaració (10 October Declaration) on Twitter.
Expectations are high that Mr Puigdemont will ask parliament to declare independence on the basis of the referendum law it passed last month.
Parliament, which is dominated by pro-independence parties, would then have 48 hours to vote.
Barcelona's influential mayor, Ada Colau, has urged Mr Puigdemont not to declare independence. She also called on Mr Rajoy to rule out direct control from Madrid.
The Madrid government called on the Catalan leader "not to do anything irreversible, not to pursue a path of no return and not to make any unilateral independence declaration".
European Council President Donald Tusk said: "A few days ago I asked Prime Minister Rajoy to look for a solution to the problem without the use of force, to look for dialogue, because the use of dialogue is always better than the use of force.
"Today I ask you [Mr Puigdemont] to respect in your intentions the constitutional order and not to announce a decision that would make such a dialogue impossible.
"Diversity should not and need not lead to conflict whose consequences would obviously be bad for the Catalans, for Spain and for whole of Europe."
When the BBC asked people for their opinion in Barcelona, one woman, Eva Iniesta, called for the Spanish government to open a "dialogue so independence is not declared".
But another person, Salvador Puig, said: "We have demonstrated and said that we don't like being part of this home and we have the right to live in the home we want and in the way we want."
How is Madrid likely to react?
Mr Rajoy is due to appear in Spain's parliament on Wednesday. He has already said any declaration of independence by Catalonia would "lead to nothing".
Under Article 155 of the constitution, his Spanish government could suspend devolution.
The leader of Spain's main opposition party, Pedro Sánchez of the Socialists, has said his party will back action by the government "in the face of any attempt to break social harmony".
What pressure is big business exerting?
A stream of companies have announced plans to move their head offices out of Catalonia in response to the crisis.
It is one of Spain's wealthiest regions, accounting for a quarter of the country's exports.
Publishing company Grupo Planeta is the latest to announce it will move from Barcelona to Madrid if there is a declaration of independence.
Do the separatists have support internationally?
The European Union has made clear that should Catalonia split from Spain, the region would cease to be part of the EU.
A European Commission spokesman told Reuters news agency it called on "all those concerned to get of this confrontation as quickly as possible and to start dialogue".
The EU, he added, had confidence "in the capacity of Prime Minister Rajoy to manage this delicate process in full respect of the Spanish constitution and the basic fundamental rights of the citizens".
Austrian Finance Minister Hans Jörg Schelling warned the effects of Catalan independence could spread beyond Spain.
"I hope that this won't lead to a crisis in the euro and in the EU but the danger naturally exists because extreme positions are clashing," he said.
How did we reach this crisis?
Catalonia, a part of the Spanish state for centuries but with its own distinct language and culture, enjoys broad autonomy under the Spanish constitution.
However, a 2005 amendment redefining the region as a "nation", boosting the status of the Catalan language and increasing local control over taxes and the judiciary was reversed by the Constitutional Court in 2010.
The economic crisis further fuelled discontent and pro-independence parties took power in the region in the 2015 elections.
Attempts to hold a legal Scottish-style referendum on independence have got nowhere with the Spanish government.